Investors lose N140bn in August, analysts predict further decline in Sept

Equities market trading on the Nigerian Stock Exchange (NSE) recorded a marginal decline in August of 2016, with market capitalisation and All-Share Index dropping by 1.5 per cent respectively, the situation market analysts attributed to persisting scarcity of foreign exchange and hike in interest rate.

Review of the equities market performance shows that investors lost N140 billion, as market capitalisation dropped from N9.620 trillion with which it opened in August to close at N9.48 trillion at the end of the month.

In the same vein, the All-Share Index, opened in August at 28,009.93 basis points, depreciated by 1.5 per cent or 410.90 basis points to close the month under review at 27,599.03 basis points.

NSE market capitalisation is the total value of companies quoted on the exchange. It is measured by the stock prices times of the number of shares issued by all companies quoted on the exchange, while the All-Share Index is the total market (broad-base) index, reflecting the total movement of all prices of shares quoted on the NSE.

Further market indices considered by our correspondent indicated that NSE Oil/Gas Index, of the other six indices, appreciated by 2.3 per cent from 298.97 basis points the equities market opened in August to 305.99 basis points it closed the month.

Following the uncertainty in the banking sector over the CBN hike in interest rate towards the end of July from 12 per cent to 14 per cent, the NSE Banking Index dropped by 2.8 per cent from 290.91 basis points to 282.79 basis points while NSE Index dropped by 2.3 per cent from 132.68 basis points to 129.28 basis points.

The Chief Executive Officer, Apt Securities & Funds Limited, Mr. Garba Kurfi, had explained to Business247 News Online that hike in interest rate would encourage transactions in money market.

He noted that the 14 per cent interest rate may bring back foreign investors to the market and impacting less on capital market.

According to him, “it is a difficult task because high interest rate will encourage moving of funds to the money market as some banks take deposit as high as 16 per cent, meaning less funds for the capital markets.”

NSE 30 Index decline by 1.1 per cent to 1232.32 basis points the market closed in August from 1245.81 basis points it opened.

Furthermore, NSE Consumer Goods Index and NSE Industrial Index marginally dropped by 0.2 per cent and 0.7 per cent to 718.28 basis points and 1,840.78 basis points respectively.

The equities market segment of The Exchange has depreciated by 3.09 per cent in year till date performance from 28,642.25 basis points it opened this year to 27,756.67 basis points as at September 2, 2016.

The President, Association of Stockbroking Houses of Nigeria (ASHON), Mr. Emeka Madubuike, said the persisted pressure on foreign exchange market and increase in interest rate from 12 per cent to 14 per cent impacted negatively on the equities market in August.

Reacting on the equities market performance expectation in September, he said, “since the money market activities were depreciating, we are expecting a marginal decline in investment within the month because of the state of foreign exchange market. I do not foresee much investment due to decrease borrowing from banks due to present recession the country is facing.

“We may not see much decline in stock prices but there will be low investors patronage compared to what the market closed at the previous month.

“For the third quarter results that will be released in October and those companies that are yet to release their second quarter results- though we expect their results to be impacted by the weak macroeconomic environment,” he added.

Our analysis of the top five gainers for the month of August shows that Total Nigeria Plc led the chart with a gain of 32.2 per cent or N58.50 to close at N240 from N181.50 it opened, followed by Airline Services And Logistics Plc rising by 17.6 per cent or N0.30 to close N2.00 from N1.70 it opened.

Presco Plc appreciated by 16.6 per cent or  N6.45 to close at N45.3 from N 38.85, followed by Eterna Plc rising by 16.6 per cent or N0.39 to close at  N2.74 from N2.35, Unilever Nigeria Plc  rising by 12.6 per cent or N4.35 to close at  N39 from N34.65.

On the losers’ side, Diamond Bank Plc led the chart dropping by 34 per cent or N0.54 to close at N1.05 from N1.59, followed by Champion Breweries Plc which depreciated by 29.5 per cent or N1.08 to close at N2.58 from N3.66 it opened.

FCMB Group Plc dropped by 27.1 per cent or N0.38 to close at N1.02 from N1.40 followed by Fidelity Bank Plc, which nosedived by 27.6 per cent or N0.34 to close at N0.89 from N1.23 it opened while Sterling Bank Plc dropped by 25.6 per cent or N0.32 to close at N0.93 from N1.25.